LONDON – Copper and nickel prices took a step back as investor optimism over possible Federal Reserve interest rate cuts waned. Recent comments from Fed Chairman Jerome Powell have led to a reassessment of the prospects for early monetary policy easing, sending industrial metals into declines.
On Monday, the London Metal Exchange (LME) fell to $8,448 per tonne, retreating from recent highs. The downturn reflects revised investor expectations following Powell’s comments last week, which initially led to a rise in the LMEX index. The index tracks the performance of six major industrial metals and has been under pressure due to high interest rates affecting commodity prices in general.
Despite this setback for copper, demand from China’s renewable energy sectors continues to provide some support for the metal. However, nickel prices fell as increased production from Indonesia and slowdowns in developed markets contrasted with the effects of Chinese policy stimulus.
The market is also digesting the consequences of the tighter supply conditions. Spot premiums and treatment charges reflect these stricter conditions, which have been exacerbated by the closure of the Cobre Panama mine. This comes at a time when global smelter capacity is growing.
Investors are now closely watching economic strength outside China through 2024 and considering how potential drags from developed markets could impact commodity prices in the future. The reassessment of global economic conditions has added a layer of uncertainty to risky assets, including industrial metals such as copper and nickel.
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